question about stocks
joe
I have about 5,000 dollars that I do not need at the moment and I was
looking to invest in a few stocks. I was looking at putting my money
in some companies that pay a dividend. Would companies like bank of
america, exxon, Coca-Cola, etc.. be good investments.
Blash
> Would companies like bank of
> america, exxon, Coca-Cola, etc.. be good investments.
They're good companies.......whether or not you eventually make a profit
when you sell them, nobody knows........
Lawyerkill
For 5000 dollars you can be on the board of directors of GCOG
SwampMidget
http://finance.google.com/finance?q=EUROX&hl=en
(NASDAQ:LETRX) ING Russia A http://finance.google.com/finance?q=LETRX&hl=en
(NASDAQ:ADRE) BLDRS Emerging Markets 50 ADR Index(ETF)
http://finance.google.com/finance?q=ADRE&hl=en
(NYSE:EWZ) iShares MSCI Brazil Index (ETF) http://finance.google.com/finance?q=EWZ&hl=en
(NYSE:FXI) iShares FTSE/Xinhua China 25 Index (ETF)
http://finance.google.com/finance?q=FXI&hl=en
(NYSE:EZA) iShares MSCI South Africa Index (ETF)
http://finance.google.com/finance?q=eza&hl=en
(NYSE:EEM) iShares MSCI Emerging Markets Indx (ETF)
http://finance.google.com/finance?q=eem&hl=en
704set
your time horizon is less than 3-5 years. It gives the market the
opportunity to go through a major cycle.
704set
"joe" <joe...@gmail.com> wrote in message
news:1185827584.7...@l70g2000hse.googlegroups.com...
lubow
Buy one and only one share of Exxon-Mobil, Coca Cola and Bank of America
from a discount broker who will ship certificates for free. The only
discount broker who does that is Muriel Siebert & Co. www.siebertnet.com
After you pay for the stocks, drop an email to Siebert's customer service
saying you want your stock certificates shipped to you.
It will take about a month, but along with the certificates will be a
welcome letter from the corporations asking you to join their DRIP (dividend
reinvestment plan). Then you are on your way to financial success.
The secret to investing with DRIPs is that you dollar cost average which
many studies have shown to be an excellent investment strategy.
Not only is it a good strategy, it will save you money in commissions
because the corporations pay the fees for maintaining their DRIPs. To them,
it's good business because small investors become good consumers of their
products.
Every quarter you invest the same amount of money into your DRIP accounts.
Now the secret to getting the most out of your investments is to mail your
quarterly investments 45 days before dividends are paid. In this way you
will get 3 months worth of dividends when you new money is invested for only
one month. Yahoo Finance will show you when dividend payments are
scheduled.
If it sounds confusing, drop us another post to this newsgroup and I'll try
my best to help.
--
Lubow
"joe" <joe...@gmail.com> wrote in message
news:1185827584.7...@l70g2000hse.googlegroups.com...
com...@webtv.net
their "dividend reinvestment plans"......you will see your investment
grow grow grow.....
" YOU ARE EITHER WITH US, OR AGAINST US "
com...@webtv.net
DaveR
years ago, I would be certainly be richer today. Especially with
commissions having been so much higher in the past.
"lubow" <lu...@lubow-industries.com> wrote in message
news:Q9uri.6751$Q85.5971@trndny02...
Lubow
> That's some really good advise, lubow. If someone had advised me to do that
> years ago, I would be certainly be richer today. Especially with
> commissions having been so much higher in the past.
>
Thanks, Dave and Mr. Comics. For a long time, the employees on the
pension committee called me, "The King of DRIPs." At one time we had
over 30 DRIP accounts. We're now down to five (SRE, REI-UN.TO, WTR,
XOM and COP). There are two reasons:
(1) Many free plans converted to paid plans.
(2) Interactive Brokers.
It's still a good strategy for people starting out. And don't forget
there are still a few like Rio-Can REI-UN.TO that give you 2% - 5%
more stock if you take your dividends in stock rather than cash.
There's an antithesis to this strategy too:
If your stock changes from a free DRIP (no charge to make voluntary
investments) to a fee based DRIP (like, say, $5 per investment) it
means things are going bad for your stock and you should sell. This
is a formula that worked for us with Bristol Myers, Harley Davidson
and Wrigley.
Bot HOG and WWY changed managements and recovered after the skid that
followed their respective conversions from free to paid DRIPs. BMY
has always been on the verge of recovery but never got there, IMO.
-- Lubow
Alan Bowler
> That's some really good advise, lubow. If someone had advised me to do that
> years ago, I would be certainly be richer today. Especially with
> commissions having been so much higher in the past.
However, if $5000 is all he has, and is likely to have
for some time, Vanguard's s&p500 fund will also get him
automatic dividend reinvestment, and a lot more diversity.
He can also set up monthly investment if he expects to
have small amounts extra to invest.
joe
hi, thanks for the advice. I will get started with DRIPs. What is the
min. i need to put down? i have 25250 sitting in an emigrant direct
account earning 5% interest. This will never happen, but lets suppose
i had 25250 in a bunch of drip accounts. Would I earn more money in
the long run
lubow
the future. That is what makes DRIP investing so good because you buy the
stocks like a mutual fund.
As for the S&P fund, it's okay, but it's something I would not do when I
have other options. DRIP accounts are still the most efficient form of
investing because the companies pay the fees, not the small investor.
--
Lubow
"Alan Bowler" <atbo...@thinkage.ca> wrote in message
news:Q5Jri.20218$13....@nnrp.ca.mci.com!nnrp1.uunet.ca...
lubow
> hi, thanks for the advice. I will get started with DRIPs. What is the
> min. i need to put down? i have 25250 sitting in an emigrant direct
> account earning 5% interest. This will never happen, but lets suppose
> i had 25250 in a bunch of drip accounts. Would I earn more money in
> the long run
>
Actually we have six DRIP accounts. The sixth (how can I forget?) is Union
Pacific UNP. UNP is up 160.13% over the last four years which averages out
to 26.98% compounded annually.
Will you make money with DRIPs?
========================
I will go out on a limb and say that a diversified portfolio of three or
four DRIPs will do well for you. Mr. Comics has done very well with DRIPs.
Perhaps he will add his two cents to this discussion.
Statistically, our worst DRIP is Aqua America which has returned 1.68% over
two years. Union Pacific has been the best.
How much do you need to invest to start?
===========================
Joe, all you need is one share. For Exxon-Mobil and Conoco Phillips, you do
not even need the one share. You can start directly with their DRIP
custodian.
This is the DRIP info I got from their websites.
Exxon Mobil 1-800-252-1800 (within the U.S. and Canada)
Conoco-Phillips Within the U.S., Canada and Puerto Rico: 1-800-814-0299
From memory, I think with Exxon and Conoco you need a minimum of $250 to
start without a broker.
With Sempre (SRE) you will need to own just one share that you buy from a
broker. I had recommended Muriel Siebert for that www.siebertnet.com
--
Lubow
FrediFizzx
http://www.equiserve.com/shs/index_shs.htm
It doesn't look like they charge anything and they had 36 companies to
choose from that don't charge fees.
Fred
"lubow" <lu...@lubow-industries.com> wrote in message
news:INPri.9290$Kk4.6672@trndny09...
lubow
> choose from that don't charge fees.
>
Not exactly true. Many of those DRIPs (particularly ADRs) listed in the
Computershare website are for-profit DRIPs. I call them pseudo-DRIPS. The
best DRIPs are those that are sponsored and paid by the company, like Exxon
Mobil, Sempra, etc. These are true DRIPs. The pseudo-DRIPs charge fees,
usually around $5 per investment have a lousy track record and participation
by a small investor is not advised. At least that's my experience with
pseudo-DRIPs.
The companies Joe gave us all have company sponsored DRIPs and are entirely
free. My advice is to go ahead with Bank of America, Coca Cola and Exxon
Mobil as DRIP accounts.
--
Lubow
FrediFizzx
Thanks for the info. Yeah, upon further investigation it looks like
there are fees via Computershare especially when selling shares. Do ya
think he should wait on BAC until it maybe hits a bottom? Dang stock
has been slowly sinking since last Nov. ;-)
Fred
Lubow
> there are fees via Computershare especially when selling shares. Do ya
> think he should wait on BAC until it maybe hits a bottom? Dang stock
> has been slowly sinking since last Nov. ;-)
>
> Fred
No, Fred. The whole idea behind DRIP investing is that we do not need
to time anything, other than sending in your investment 45 days before
the dividend payment date, DRIPs are based on dollar cost averaging.
In lousy times, Joe will get more shares for his money. In good
times, fewer shares. Of course if Bank of America or XOM or KO go
belly up, then Joe will really have a problem. But, then again, if
stock investing could guarantee a safe return, we would be getting
max'ed out at 4 or 5% instead of, say, the 26% annual compounded
returns we got with Uncle Pete (Union Pacific UNP).
-- Lubow
Alan Bowler
> The fact that Joe has $5K now does not mean he will never have money into
> the future. That is what makes DRIP investing so good because you buy the
> stocks like a mutual fund.
That is why I prefixed my advice with:
"if $5000 is all he has, and is likely to have for some time"
I did not assume that he would never have more in the future.
I was pointing to a better strategy *if* he has not expecting
to have more in the foreseeable future.
>
> As for the S&P fund, it's okay, but it's something I would not do when I
> have other options. DRIP accounts are still the most efficient form of
> investing because the companies pay the fees, not the small investor.
It is a matter of scale. With only $5k you really are not
going to get very diversified, and there are initial set up costs
for each DRIP account. Once started they are very efficient,
but you do need a long time for that to pay off.
I particularly pointed to the Vanguard S&P fund because
it has an exceptionally low MER, and like all open-end mutual
funds dividends do get reinvested like a DRIP.
The Vanguard fund is cheap enough, that it wins over the setup
costs of multiple DRIP accounts, and gives more diversity.
There is the added consideration that US accounting rules
make the mutual fund less work since you need not track
individual share lots.
North of the border the situation is a bit different.
Canadian tax rules don't make DRIPs more complicated than
mutual funds, and the cheapest index fund is noticeably
more expensive than the Vanguard S&P500 fund.
Lubow
> lubowwrote:
In the category of expense ratios, you cannot beat XOM and COP.
They're zero. For a utility like SRE, the expense is the initial $15
commission.
DRIPs could be a pain in the neck when you do sell, but it is not as
bad as you would think. IRS allows the DRIP investor to list all long
term reinvested dividends plus cash infusions as a single amount with
the date as "Various." The short term investments and reinvestments
would need to be itemized. But, again, it is exactly the same
procedure as if it were a mutual fund.
Joe's example of a bank, a food/beverage and oil is diversified enough
for me and unlike a fund or ETF, he gets exactly what he wants without
having to subsidize a fund manager's new Ferrari. He gets the best of
both worlds. He pays for his investments like a mutual fund without
any of the overhead.
Canadian DRIPs can be rather painful for a US resident. Most Canadian
DRIPs are not approved by the SEC and US residents cannot participate.
But a few Canadian DRIPs are available to US residents and have worked
out very well for us (REI-UN.TO and SU). Canadian DRIP custodians
will reinvest the dividends without any heartburn. However, to add
new cash into a Canadian DRIP is, indeed, a pain in the butt. Under
Canadian law, the first investment into a Canadian DRIP has to be paid
by a check drawn on a Canadian bank located in Canada. The check
needs to have the name of the DRIP owners on it as well. To establish
a checking account in Canada, the depositor must physically appear at
the bank. We use the Bank of Montreal in Niagara Falls, Ontario.
Bottom line: if you want to invest in a Canadian DRIP, buy the stock
then take a trip to Canada.